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Sunday, August 20, 2006

Pictures of New Housing Coming in Washington, DC

New duplex housing coming along the 4900 block of 7th Street NE in Washington, DC

92 comments:

I am glad to see that they are offering more and more condos in DC and its inner suburbs. These types of housing will be perfect for people who work in and around the city and are willing to sacrifice land and space for an easier commute. I anticipate continuing being such a person for at least a few years more.

However, the key issue will be value. For a new condo, in a safe area close to the metro, I think a reasonable price might be to go as high as 2-3 times median income. I know that sounds very high by historical standards, but maybe others from the (somewhat) wealthier suburbs will move in as well. So, I might even be willing to pay as much as $120,000 to $150,000 for a new condo in DC.

Also, it might be interesting to do a comparison with renting. Are the following estimates reasonable?

A condo has a fee of what, about $300/month, typically?

Plus utilities of $100/ month?

Taxes/insurance of $300/ month?

Maintenance $100/ month?

So that's about $800/month so far. Now, you can probably rent in those neighborhoods for about $1400/ month (including utilities). So you wouldn't want your mortgage to come in at net interest payments (after tax give backs) of more than $600/ month. And that is assuming you buy at a price where you are pretty sure that you can sell at at least that price + your closing costs.

You should base what you can afford on your income and your ability to put down from 0% to 100% of the sales price in cash and your comfort level with particular types of financing vehicles and the level of the resulting payments.

"So, I might even be willing to pay as much as $120,000 to $150,000 for a new condo in DC."

Um, good luck with that. My question to you is, absent some awful event that nobody would like to see, do you really believe condos near metro stations in DC and inner suburbs will actually ever go for $120-$150K? That strokes me as extremely, extremely, extremely unlikely. That mortgage payment would be half (or less) of rents in my area. (I'm assuming two bedroom, here. But one bedroom rents are still substantially above the mortgage payment on a 120-150K condo.

Yeah, and I wasn't including tax deductibility of the mortgage payment.

We can break it down and go through the whole analysis if you want, but 120-150K is, in my view, a laughably low price to expect for condos in areas where rents run at 1400. Maybe if we have early 80s style interest rates or something, but even then...no.

Insurance and maintence are covered in the condo fee. Some condo fees cover some, even all, utilities but all inclusive would typicaly be higher than $300/month. Redskins Fan's numbers are off by about $200-$250/month. The only insurance you need as a condo owner is for the contents, just like a renter.

"Insurance and maintence are covered in the condo fee. Some condo fees cover some, even all, utilities but all inclusive would typicaly be higher than $300/month. Redskins Fan's numbers are off by about $200-$250/month. The only insurance you need as a condo owner is for the contents, just like a renter."

The building's maintainence fees are covered, but if your washer or dryer break in a condo you are paying not the condo association.

The problem I have with some people who are active on this blog is that they look at neighborhood and completely throw them into the gutter. As if everybody near 7th Street NE was on the corner selling crack. Michigan Park happens to be a decent "middle class" neighborhood. Haven't housing heads been telling people they may need to sacrifice their first choice of neighborhoods. Isn't gentrification really about people deciding to move into less desirable neighborhoods and then transforming them fromt he inside out. People will hand over their left leg to live in Columbia Heights which is rife with gang activity, stabbings, and murders, but won't move to NE. Why is that? As far as the duplexes that are being built in the area, are they overpriced in my opinion. ABSOLUTELY! They run 500K and the homes sre right next to the city dump. But the last time I checked they were sold out. Built by K Hov.

Redskins Fan may be on to something. There are efficiency apartments at the Chastleton in Dupont Circle (a long way from 7th Street, NE) being advertised in today's paper in the "high 100's."

A one bedroom condo in Dupont Circle (proper) was not difficult to find in the mid 1990's for $50,000. Oh, and it was extremely difficult to get a mortgage, even at those prices.

It amazes me that everyone thinks the current run up is somehow normal, something that is typical and should be expected. I think people will be shocked at how low some of this stuff will go. There is every reason in the world to expect $150,000 condos in the not too distant future. Those reasons include current rental value, income levels, easy, no money down mortgages and the mania that has supported this.

Redskins Fan, normally I agree with your posts, but you're way off in hoping for that price. $150K maybe for an efficiency, that's it. I don't even think suburban 1 bds will go quite that low.

Good luck.

I plan to own. I am waiting for prices to fall, because it would be silly to pay a peak price just before they do, but I'm not living in la la land as far as basement bargains.

This is still DC. Yes, we're going to have a price correction, but no one is going to give away a condo for that price--rent would be higher than the monthly cost at that point. Everyone would jump in to invest, driving prices up, yadda yadda yadda.

The market will set a floor on how low things can go. Lower than housingheads hope, but not quite that low.

Fact: Condos could be purchased in the mid 1990's, in desirable neighborhoods, with traditional, fixed rate mortgages for a steep discount to the cost of rent.

That is a fact. How is that possible? Two emotions: fear and despair. Fear on the part of buyers, who watched prices fall for years. Despair on the part of sellers, who let go of property for a pittance, because there was "no hope" the market would ever improve.

That is the exact opposite of what we have seen in the past few years. A return to that scenario is almost inevitable.

"Fact: Condos could be purchased in the mid 1990's, in desirable neighborhoods, with traditional, fixed rate mortgages for a steep discount to the cost of rent."

dc_too, That was also a period when the District had a convicted felon as mayor, no trash collection, a control board in place, etc etc. It's a very very different place today. Don't expect to get similar prices now in similar neighborhoods.

And what if properties rents rise so dramatically that it is far cheaper to buy than to rent? Would you then make an offer "over asking" because based on how you determine fair selling prices, the selling price should be higher than what the seller is asking? I mean that would seem like the only fair thing to do since you are basing fair market value on rents, wouldn't it?

"dc_too, That was also a period when the District had a convicted felon as mayor, no trash collection, a control board in place, etc etc. It's a very very different place today. Don't expect to get similar prices now in similar neighborhoods."

Lance, I did not say prices would go back to those levels, only that they will go much lower than anyone expects.

And BTW, while we had a felon governing the District, California was being governed by a white, race-bating, conservative Republican. Residential real estate was a masacre during his tenure. Politicians have next to nothing to do with market cycles.

dc_too said:"Politicians have next to nothing to do with market cycles."

Sorry, I couldn't disagree with you more. Politicians, especially a mayor in the District's case or a governor in California's case, set the tone and direction of where a place is heading. Even if it takes a long time for real damage to be unleashed on the jurisdiction, people react immediately to the installation of a bad or danagerous politician knowing that others will react similarly and they don't want to be left holding the bag. So much as changed about the District ... and the Washington area in general ... in 10 years that no comparison with "what was" 10 years ago can be relevant. DC has entered new territory ... capital of the world ... and not just "the free world". You'd have to go back to Rome in its early years to even come close to finding a comparable era to compare against.

Just what do you think has changed, fundamentally, Lance? Do you think the United States rocketed to economic supremecy in the past ten years alone? Was the federal government created, here, in our little District, in the past ten years?

What an astounding justification for house prices. Besides, if it's true, how come prices are falling?

Oh, cost to purchase fell below rental cost in New York City in the '90's, too. There was a Jewish bachelor Democrat mayor in those days. But I guess DC surpasses NYC in every way, now, in our "new paradigm," so that doesn't matter either. Right.

"And what if properties rents rise so dramatically that it is far cheaper to buy than to rent? Would you then make an offer "over asking" because based on how you determine fair selling prices, the selling price should be higher than what the seller is asking?"

I'd buy it at asking (maybe a little less if I thought I had room to bargain), because that'd be a great deal.

"I mean that would seem like the only fair thing to do since you are basing fair market value on rents, wouldn't it? "

The smart thing to do would be to buy it. The fair thing? Who knows? But yes, if the prices get crazy relative to rents, it's one sign of a possible bubble. Other signs include over half of the new buyers in an area using option and interest-only financing as affordability mechanisms.

It's also a sign of a bubble if 30% of buyers across the nation use these instruments, and 70% only make the minimum payment every month.

Keith said:"It's also a sign of a bubble if 30% of buyers across the nation use these instruments, and 70% only make the minimum payment every month."

So, you're assuming then that it is only because of artificially high prices that people would turn to new financing methods intended to help them? Why wouldn't they turn to them if the high prices were based on not artifical but rather real reasons such as general economic growth and soaring salaries and other incredible wealth gains for the "haves" in society?

O.k., let's say my 120-150K was unreasonable. Like I said, I am not sure. Is 180K more reasonable? Seriously. I am willing to entertain the possibility that 180K is reasonable, with some very optimistic assumptions about the neighborhood and future DC job market, and if the condos are really nice.

I don't know what they will offer those condos for. My bet is 250+ at *minimum* for the studios, and going up from there, if recent new condos are any indication. Thus, if I say 150, and you say "no, more like 180", and the developer says "350," then am I really that far off, even if you are right? 180 is much closer to 150 than it is to 300 or 350, or even 250.

BTW- all my estimates are my own preferences, not my predictions as to what prices will be in the future.

That was also a period when the District had a convicted felon as mayor, no trash collection, a control board in place, etc etc. It's a very very different place today. Don't expect to get similar prices now in similar neighborhoods.

Don't be so sure. Not to get into politics, but elections are just around the corner, a return to the bad old days is not out of the question at this point. Also, Marion Barry is not out of the political picture either.

It is apparent from your posts that you are just looking for validation for your decision to rent. You don't need it. It is your personal decision. Some people are meant to rent and you are one of them. Who cares?

There can't be a substantive response to someone who says they'll only buy if they are offered an unsubstantive price. I mean, even you say: "BTW- all my estimates are my own preferences, not my predictions as to what prices will be in the future."

A condo has a fee of what, about $300/month, typically? YES, THIS IS REASONABLE. TYPICALLY, WATER AND TRASH DISPOSAL WOULD BE INCLUDED IN THIS (AS WELL AS UPKEEP OF COMMON ELEMENTS). WOULD BE GREATER IF HEAT/LIGHT/ETC. IS INCLUDED IN FEE.

Plus utilities of $100/ month? IF YOU MEAN HEAT AND LIGHT ... YES IN THE SUMMER MONTHS AND IN THE WINTER MONTHS, BUT WOULD PROBABLY BE A LITTLE LESS OVERALL AS YOU DON'T NEED TO HEAT OR COOL MOST TIMES SPRING AND FALL.

Taxes/insurance of $300/ month? LIKE THE OTHER POSTER SAID, DON'T COUNT INSURANCE HERE BECAUSE YOUR UNIT IS FOR THE MOST PART INSURED BY THE ASSOCIATION ... AND PAID FOR VIA THE ASSOCIATION FEE. LIKE A RENTER'S POLICY, YOU CAN TAKE OUT CONDO OWNER'S POLICY TO COVER THE CONTENTS AND YOUR LIABILITY. SO, THIS IS AN OPTIONAL EXPENSE THAT YOU CAN HAVE WHETHER YOU RENT OR YOU OWN. TAXES CAN VARY TREMENDOUSLY PER JURISDICTION. IN THE DISTRICT, A $180,000 CONDO WOULD GARNER PROPERTY TAXES OF ABOUT $1,000/YR OR $83/MONTH.

Maintenance $100/ month? THIS SEEMS AWFULLY HIGH! LIKE DAVID SAID, THE ASSOCIATION WON'T PAY TO FIX YOUR APPLIANCES ... OR TO REPAIR THE TOILET IF IT NEEDS TO BE FIXED. BUT REALISTICALLY, UNLESS YOU ARE BUYING A NEW RANGE AND FRIDGE EVERY YEAR, THIS IS WAY TOO MUCH. I WOULD BUDGET SOMETHING CLOSER TO BETWEEN $35 AND $40/MONTH FOR THIS.

IN 1929 John D. Rockefeller decided it was time to sell shares when even a shoe-shine boy offered him a share tip. During the past week The Economist's economics editor has been advised by a taxi driver, a plumber and a hairdresser that “you can't go wrong” investing in housing—the more you own the better. Is this a sign that it is time to get out? At the very least, as house prices around the world climb to ever loftier heights, and more and more people jump on to the buy-to-let ladder, it is time to expose some of the fallacies regularly trotted out by so many self-appointed housing experts.

One common error is that house prices must continue to rise because of a limited supply of land. For instance, it is argued that “house prices will always rise in London because lots of people want to live here”. But this confuses the level of prices with their rate of change. Home prices are bound to be higher in big cities because of land scarcity, but this does not guarantee that urban house prices will keep rising indefinitely—just look at Tokyo's huge price-drops since 1990. And, though it is true that a fixed supply of homes may push up house prices if the population is rising, this would imply a steady rise in prices, not the 20% annual jumps of recent years.

A second flawed argument is that low interest rates make buying a home cheaper, and so push up demand and prices. Lower interest rates may have allowed some people, who otherwise could not have afforded a mortgage, to buy a home. But many borrowers who think mortgages are cheaper are suffering from money illusion.

Interest rates are not very low in real, inflation-adjusted terms. Initial interest payments may seem low in relation to income, but because inflation is also low it will not erode the real burden of debt as swiftly as it once did. So in later years mortgage payments will be much larger in real terms. To argue that low nominal interest rates make buying a home cheaper is like arguing that a car loan paid off over four years is cheaper than one repaid over two years.

Fallacy number three is a favourite claim of Alan Greenspan, chairman of America's Federal Reserve. This is that price bubbles are less likely in housing than in the stockmarket because higher transaction costs discourage speculation. In fact, several studies have shown that both in theory and in practice bubbles are more likely in housing than in shares. A study by the IMF finds that a sharp rise in house prices is far more likely to be followed by a bust than is a share-price boom.

Another curiosity is the popular claim that investing in property is safer than buying shares (a.k.a. stocks), for bricks and mortar are here forever. But that says nothing about relative value. Buy at the peak of a property bubble and your investment is not “safe”. To an investor, the value of a house also lies in the rents that a property can generate. If your tenant unexpectedly moves out, you will suddenly find that your income drops to zero.

This leads to a fifth falsehood: it is always better to buy a house, because “paying rent is money down the drain”. Thanks to a growing glut of rental properties in many cities, from Sydney to London, the cost of renting is currently cheaper than the cost of paying a mortgage. Only if (a big if) prices continue to rise does buying always make sense.

Myth number six is that, even if houses are overvalued, their price is unlikely to fall because interest rates will not rise to the double-digit rates that burst previous housing bubbles. Again, the experience of Japan suggests that prices can fall without a big increase in interest rates. All that is needed is a change in sentiment. First-time buyers may balk at sky-high prices, for example, or if rents fall and prices stop rising investors may sell as their expectation of capital gains disappears.

The seventh fallacy is to believe that, even if prices have overshot, they will not fall, but just level off. When inflation was high, real house prices did indeed adjust in this way. But, if inflation remains at 1-2%, it will take years for real house prices to return to normal levels. So today prices are more likely than ever to fall in nominal, as well as real, terms.

Each of these seven arguments may contain a small grain of truth in certain circumstances, but they should never be the articles of faith they have become. The more often they are invoked, the greater the risk that prices are headed for a crash.

Sure sounds like the tenants of the "faithful" ... Those that pointed out several months ago that believing in a bursting bubble was like believing in a faith were sure correct! Never mind that within the first couple paragraphs I easliy found at least one "given" that was wrong ... (that inflation was continue to remain low for the duration of the low interest mortgages ... already disproved by increasing inflation.)

I think that the article makes a lot of sense. The prices of housing have gone up primarily because of speculation, not because of population growth, or because its "intrinsic" value has all of a sudden gone up in the last 5 years (has population really shot up THAT much in the past 5 years causing a massive housing shortage??)

I like the part where it talks about a change in sentiment (and not just interest rates) that will cause a bubble to burst. Interest rates may be a trigger, but it is really mass psychology that will change the direction of the housing market.

The price of a home is determined by what people will pay for that home. Once enough people start to realize that they do not want to pay a hugely inflated price for something that really isn't worth what it is on paper, there WILL be less buyers in the market, and less demand, driving prices down.

Thanks for your comments. Where I would disagree is on the taxes. You are assuming that I actually paid 180,000 for the condo. While that may be a fair price for the condo, I doubt the current price is really that low. Thus, with a higher price, there would be higher taxes.

"Why wouldn't they turn to them if the high prices were based on not artifical but rather real reasons such as general economic growth and soaring salaries and other incredible wealth gains for the "haves" in society?"

Again, increasing inequality has been with us since the early 70s. Larger incredible wealth gains also took place during the 90s. You're trying to explain an unprecedented run-up in housing prices in the last 5 years with changes that have been occurring over the last 30.

Again, buyers really couldn't afford the prices that started developing in mid-2003 to early 2004. So many used "creative" financing to buy, and people bought because they were afraid of being priced out forever. This caused the bubble. Everybody who was afraid or thought they'd sell their house to someone else has now bought. Many of them can't afford to pay for their house, and there's no appreciation to save them, and the downward slide has begun.

Maintenance $100/ month? THIS SEEMS AWFULLY HIGH! LIKE DAVID SAID, THE ASSOCIATION WON'T PAY TO FIX YOUR APPLIANCES ... OR TO REPAIR THE TOILET IF IT NEEDS TO BE FIXED. BUT REALISTICALLY, UNLESS YOU ARE BUYING A NEW RANGE AND FRIDGE EVERY YEAR, THIS IS WAY TOO MUCH. I WOULD BUDGET SOMETHING CLOSER TO BETWEEN $35 AND $40/MONTH FOR THIS.

$35 a month?? Come on. Think about when you first moved into your home. Did you buy paint? Did you buy a few new items to spruce the place up? When a water heater goes out one year, and the next the kitchen sink needs some repairs, and the next year you put in a new floor, etc. suddenly $420 per year is not much at all.

And for a SFH, if you replace a window, or repave the drive, $35 is nothing. And this does not even include the high-item expenses such as upgrading an AC system or fixing a roof. If you pay $3K to have your roof fixed, in Lance's $35 per month estimate, you have now eaten up 7 years worth of maintenance!!

On the other hand, I think it is pretty typical for people to underestimate the amount of $ home maintenance costs.

Also, the old rule used to be, estimate 30% of your home's cost to furnish it. If your house cost $180K, estimate $60K to furnish the whole thing. Of course, with current home prices, this rule seems to have gone out the window.

David, please go after the people behind the master's degree program in real estate at John's Hopkin's University. What a shocking, deplorable, and despicable concept! An M.S. in Real Estate?! Someone like you can bring them down.

"David, please go after the people behind the master's degree program in real estate at John's Hopkin's University. What a shocking, deplorable, and despicable concept! An M.S. in Real Estate?! Someone like you can bring them down."

Yes, because David really opposes the systemic study of real estate markets. Why, he's so wild, that he agrees with Ken Heebner, who managed the 1.2 billion dollar CGM realty fund, which has the best 10-year track record of all the realty mutual funds.

Mr. Heebner: A significant decline in prices is coming. A huge buildup of inventories is taking place, and then we're going to see a major [retrenchment] in hot markets in California, Arizona, Florida and up the East Coast. These markets could fall 50% from their peaks.

No no no, you have it all wrong. The Real Estate Industrial Complex (tm) is running an elaborate scam. Refer to Niki's past statements to that effect. Nicki's is the first local bubble blog which David links to here. (Baltimore)

It is just a scam! The fact that Heebner agrees with David's theory is merely incidental.

In regards to Condo Fees, unfortunately it really varies building to building. But, let's take the $300 for a one-bedroom condo. I think that's a little higher than most (unless you're talking really upscale places), but I think that it works as some of the money will go towards the reserve fund if it's a new building. My personal experience with this has been closer to $250 for one bedrooms, but $300 is more conservative.

As mentioned previously, you insurance is basically the same cost as renter’s, depending on how much your stuff is worth.

Maintenance – especially on a new condo – is going to be much less than $100 a month. Typically, you are responsible for everything once they leave the walls and enter your unit – pipes, electrical wire, etc. If your toilet breaks, you gotta fix it. If the pipe in the wall breaks, your condo fee covers it. This is what you pay your condo fee for. Same for any exterior maintenance.

I rent out a studio apartment, and my monthly maintenance has also been a lot less than $100 a month, but the place was in great condition and I keep it that way. Keep in mind that with a one-bedroom apartment, there isn’t a ton of stuff to go wrong. I think a two-bedroom apartment or bigger could have a $100 a month worth of maintenance, but this is only my opinion. This is the same for utilities -- $100 a month is a little high (unless you’re talking cable, phone, etc), because again you don’t have a huge space to heat or cool. I would think that the max someone would run in a one-bedroom place is $75.

In DC, taxes are .92 for every $100 assessed. So a $300,000 condo would be $2760, or $230 a month. There is a max 10% cap per year on the rise, and if your household is less than $100K a year in income, you get further deductions. So odds are that you’ll be less than the max, but it’s there for those who want to do the math.

That’s just one person’s opinion on how to factor in costs. So, a $300,000 condo would cost $1,896.20 a month (6.5%, not factoring in any down payment or PMI), + $300 for condo fee, $230 a month taxes, $150 a month in utilities and maintenance, so your monthly cost is $2576. I think that’s a conservative estimate, but you can go property to property and do the math per condo fees and taxes to get your own numbers.

On a separate note, the Chastleton is a co-op, which is why it’s much cheaper. There are plenty of co-op opportunities that are all cheaper than regular condo ownership – this is especially popular in NYC due to the high price of real estate there.

data miner, I don't think "housingheads" are arguing about a retreat in prices. I think what they are arguing about is the "Doom and/or Gloom" position of most bubbleheads.

For example, look at 'Skins Fan's statements. If the average 1bdrm condo near a Metro station in DC falls to $150K, what will happen to all the SFH homes near Metro stations? (There are many). They'll be worth what? $250K in 'Skins scenario? That is financial devestation for everybody. We're talking Dust Bowl, Grapes of Wrath types if scenes in that case.

Why not just join an anti-US group and attack? You'll be working toward your goal of a major financial collapse instead of armchair quarterbacking (pun intended).

I think there will be a pullback as well. What I'm trying to figure out is the scope. I mention the numbers on the resets, because magnitude is important. If the average loan size of a resetting ARM is $300,000 then the $137 billion would represent about 456,000 homes or less than 0.4% of the the housing stock in the US. Even if they all failed to meet the new payment and were sold at foreclosure the impact would not be catastrophic.

I never said that SFHs in Chevy Chase would cost 250K. Chevy Chase has been a wealthy suburb for many decades, and I am not forecasting that to change.

Six years ago, condos near some metro stations were less than 150K. Small SFHs near some metro stations were even that low, even 3-4 years ago. Given the median household income in the area, those kinds of prices are not crazy, nor are they "gloom and doom."

This is not to say that 1 bedroom condos in every area will be worth 150K, but some should be.

The reset numbers I quoted aren't "my numbers" they are a quote from an article on Moneycentral.msn.com quoting a UBS study. Not necessarily the gold standard for reliability, but better than your assertions.

Data Miner,Maybe I'm pessimistic because of how many people I know who are going to go BK in the next year or two due to suicide loans.

Maybe I'm pessimistic on home values as the last time I saw them this out of whack I watched prices drop 40% in my folks neighborhood.

But my assertion that if home prices are dropping condos crash... that's happened in every housing downturn. There is a reason that real estate is refered to as the USA's most cyclic business.

How about this, let's agree to disagree until the Wednesday and Thursday home sales numbers are posted. I'm curious, what's your prediction? Will the numbers meet the street's estimate? I believe IIRC that its 6.16 million resale homes and 1.10 million new homes is the predicted consensus by wall street.

My prediction? Just under 6.0 million resale homes and just under 1.0 million new home sales.

A huge drop? Nope. But you must have noticed the inventory of for sale homes in your area. If lack of inventory drove prices up... Surplus will drive prices down.

I know way too many people who must sell or go BK. Look at the Florida foreclosure rate. 8,600 in one month. With 30% of the affluent's savings into "investment properties," I really doubt DC home prices won't be affected by the ongoing Florida housing crash.

However, my California will be *much* harder hit. Supposidly 40% of our savings is in investment properties. So once the slide starts here... who knows when it will stop.

As to magnitude, 30-50% declines keep popping up in various scenarios.

VA Investor has compared this cycle to past cycles and predicts 20% for SFHs and 40% for condos. Essentially, market observation and trends based on past cycles.

Another poster (Keith?) has postulated that only the '04, and '05 years were unsustainable run up years. This would amount to about a 40% pull back in prices if you wipe out the gains from those 2 years and revert to 2003 numbers.

My own preference is to look at long term trend lines. I took housing data from NVAR (link below) for the last 30 years in NOVA and did a least squares fit of the data. This long term trend indicates that current prices are some 50% above trend.

Regarding your observation that homes under reset threat are only .4% of all homes, do you think it is possible for there to be a massive pullback in prices without a doom and gloom scenario?

To answer your question with either a 'yes' or a 'no', I would say "yes". With regard to the NVAR market, I think it is extremely unlikely that prices will return to the trend anytime soon. Soon being decades.

I am in the "things are different" camp. for metro DC, anyway.

For example according the the Census Bureau, the vacant housing rate for the DC area is about half of the national average.

(this like is for the city of DC, and DC is at the national average, but the suburbs with the majorityof the metro population are very tight)

That means housing construction has not kept pace with demand. (the DC condo market is probably an exception). The lag is not solely because the time it takes to build either. Construction is difficult in the area, relative to places like Texas. An example is metro DC is in the Cheasepeake Bay watershed, and new construction is subject to the Chesapeake Bay Preservation Act. This was passed inthe early 1990's and has gradually been phased in, added to, and enforced, so that it is a burden to almost every project. There is no comparable environmental restriction in places like Dallas.

CBAY is just one piece of the puzzle, not the only reason, why I don't think we will return to the mean anytime soon.

"CBAY is just one piece of the puzzle, not the only reason, why I don't think we will return to the mean anytime soon."

Brutal traffic congestion is another piece of the puzzle. No relief in sight for the brutal traffic congestion is another piece, as is a YoY increase in the overall traffic congestion in the DC area.

Wait 'till the first flakes of snow this year fall on a weekday morning during rush hour. Then think about what life would be like at that moment if you didn't have to drive toward DC; if you were already inside the beltway instead.

One of the weathermen for one of the local network TV stations moved to Loudoun County less than three years ago. I remember him complaining on camera about his commute to work during a period of regular, light snowfall.

Vacant E. 62nd St. lot where Dr. Nicholas Bartha's townhouse stood has $8 million price tag.Potential buyers have been flooding the phone lines of the broker hired to sell the site of the upper East Side townhouse blown up by the late Dr. Nicholas Bartha.

"We really have had a great deal of interest," said Florrie Milan, a broker with Brown Harris Stevens who has listed the 20-by-100-foot lot on E. 62nd St. for a cool $8 million.

No, the high end of the job market in DC won't grow in the coming years...

Government Goes After Grungy Geeks

http://www.strategypage.com/htmw/htiw/articles/20060820.aspx

August 20, 2006: The U.S. government, and especially the Department of Defense, is facing a computer security crises. The first generation of computer security people are nearing retirement age, and some 40 percent of the senior people are expected to leave government service in the next few years. Many will take new jobs with civilian computer security firms, and make a lot more money than they did as government employees. But now the government is desperate to replace a lot of talent in a short time.

The solution is apparently to toss the recruiting rule book. As a result, government recruiters are pitching hackers at conventions, and online, and telling them that it's become a lot easier for a skilled hacker to become a fed. First of all, a college degree is no longer required. This has long been a stumbling block for government recruiters. They all know that Bill Gates, and many other hotshot hackers, are college dropouts.

Next is a major revision of "lifestyle rules" that previously kept many skilled hackers out of government jobs that required a security clearance. These are the best paying jobs, and ones that are most attractive to the most capable people. The major change has been a new lie detector (polygraph) test, which basically just looks for loyalty to the United States, and not an in-depth survey of your life. If you've been off illegal drugs for the last year, you're probably free of any problems in that area. Jobs that only require the lowest level of security clearance (Secret, as opposed to Top Secret and above) don't require polygraph at all.

Another obstacle to recruiting was the months it took for a new hire to get a security clearance. That has been cut down to under a month. Moreover, potential candidates are also told that there are similar jobs available with companies that provide contract services to the government. Some candidates who can't make it past the government screening, can get in at a civilian firm. After a year or so of good service there, it's much easier to get jobs with the government.

Applicants still have to survive a credit check and search for warrants or other legal problems. Some slack will be cut if an applicant is particularly talented. The government recruiters are willing to deal, because the situation is bad and getting worse.

Yep, inventory's been flat since May, as the median asking price has fallen 5%. Since we know the sales price has moved from 99% of the asking to 96%, that's a 9% fall, with no reduction in inventory, thus showing that David is smarter and more insightful than you are. When you gain some maturity, you can learn from David.

If you go to DC's last housing peak, in 1989, and let appreciation rates run at 4.5%, to reflect the extra appereciation from zoning restrictions that restrict supply responses in housing, you still find that housing is overvalued by 25% in the DC area.

I am a homeowner who owns 2 houses free and clear. Purchased several in last bubble busting period Big Guy. Took a few Fools to the cleaners back then near the bottom.

DO NOT LSITEN TO A REALTOR OR BUY A HOUSE NOW. IT IS THE MOST EXPENSIVE HOUSING MARKET I HAVE EVER SEEN....EVER!

REMEMBER ALL THE CSCO INVESTORS NUDGING ME WHY DON'T YOU OWN IT?OF COURSE THESE BLOATED HEADED FOOLS SAID THEY WERE LONG-TERM INVERSTORS ALSO ANSD WERE GOING TO HOLD FOR 20 YEARS. WELL THEY AIN'T HOLDING ANYMORE.

When a sector has been so exploited by flippers speculators and buyers then the party is up. The hangover is here.

So many people here are dreaming. No way would any rational seller willfully give up their property for a price much lower than what they paid for. I own a studio in Dupont Circle and I would not sell it for less than I paid for it. I would rather rent it out since rent is rising at 3-5% a year at more than what I am paying for my mortgage and condo fees right now.

There's a lot of development going on along 14th and 15th Street NW between U St and P St which used to be ghetto so if you can buy or already own a home in that area now, expect prices to remain stable and rebound in a few years even when the bubble bursts in the DC Metro housing market. There wouldn't be as much development in this area now if there wasn't some expectation from the developers. This area is probably the most convenient location.

Both 14th and 16th street are very convenient routes downtown. 14th Street also leads to 395, the airport and Northern VA. Frequent buses along 14th and 16th also take you directly to McPherson Square (Blue/Orange) and Metro Center (Blue/Orange/Red). If you live closer to U Street, it is also convenient to take the bus up to Adams Morgan using one of the many buses that run up that way. Both Dupont Circle Metro (Red) and 13th and U Metro (Green) are within 10 minutes walking distance.

There is a choice of Whole Foods or Safeway, both within 10 minutes walking distance. There is plenty of nightlife-- both gay or straight-- as it is close to the U Street Coordidor, Adams Morgan, and the gay bars along 14th St and 17th St. There is a wide selection of restaurants and retail stores in this area as well.